Figure 15-3

Figure 15-3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-3.What happens to the monopolist represented in the diagram in the long run, if costs and demand stay the same?
A)It will raise its price at least until it breaks even.
B)If the cost and demand curves remain the same, it will exit the market.
C)The government will subsidize the monopoly to enable it to break even.
D)It will be forced out of business by more efficient producers.

Question

Figure 15-3
  
Figure 15-3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 15-3.What happens to the monopolist represented in the diagram in the long run, if costs and demand stay the same?
A)It will raise its price at least until it breaks even. 
B)If the cost and demand curves remain the same, it will exit the market. 
C)The government will subsidize the monopoly to enable it to break even. 
D)It will be forced out of business by more efficient producers.

Quizplus · Accepted Answer

In the long run, the monopolist represented in the diagram will exit the market if the cost and demand curves remain the same. This is because the monopolist is not able to earn enough profits to cover its costs, and it will not be able to sustain losses indefinitely. Therefore, option B is the correct choice. Options A, C, and D are incorrect because they do not accurately reflect what happens to a monopolist in the long run when costs and demand remain the same.

Figure 15-3 Figure 15-3 Above Shows the Demand and Cost Curves Facing